Criminal Justice News

Thursday, September 27, 2012

Virginia Businessman Pleads Guilty to Bribery and Other Charges in Contracting Scheme Involving U.S. Army

Defendant
Admits Providing Money to Army Official, Paying for Trips, Luxury Vehicles, and
Other Things of Value

WASHINGTON—Oh Sung Kwon, 47, a Northern
Virginia businessman, pled guilty today to federal charges stemming from a
bribery scheme in which he paid thousands of dollars to an Army official in
return for government contracts, as well as a separate scheme involving
fraudulent real estate sales and refinances.

Kwon, also known as Thomas Kwon, of
Vienna, Virginia, pled guilty in the U.S. District Court for the District of
Columbia to one count each of bribery, conspiracy to commit bank fraud and
willful failure to file a tax return. He appeared before the Honorable
Magistrate Judge John M. Facciola. He faces a statutory maximum of 21 years in
prison, along with potential fines, restitution and a judgment of forfeiture.
No sentencing date was set.

Kwon was the co-founder and chief
executive officer of Avenciatech Inc., a government contractor based in
Annandale, Virginia. He is among 12 people who have pled guilty to federal
charges for their roles in the largest domestic bribery and bid-rigging scheme
in the history of federal contracting. The investigation is continuing.

The plea was announced by U.S. Attorney
Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the
FBI’s Washington Field Office; Rick A. Raven, Special Agent in Charge of the
Washington Field Office of the Internal Revenue Service-Criminal Investigation
(IRS-CI); Peggy E. Gustafson, Inspector General for the Small Business
Administration (SBA); Robert E. Craig, Special Agent in Charge of the
Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS);
and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s
Major Procurement Fraud Unit (MPFU).

According to a statement of offense,
signed by the government and the defendant, Kwon learned of a contract-steering
scheme from two business contacts: Alex N. Cho, who was then the chief
technology officer for Nova Datacom LLC and a second Nova Datacom employee.
This scheme involved contracts and subcontracts awarded through the U.S. Army
Corps of Engineers in return for hundreds of thousands of dollars in payments
to Kerry F. Khan. At the time, Khan was a program manager at the Army Corps of
Engineers. Kwon’s role in the scheme involving the Army Corps of Engineers
involved Kwon arranging for Cho and another Nova Datacom employee to exchange
checks for approximately $700,000 in cash, which was paid to Khan in exchange
for government contracts. Kwon later attempted to obstruct the resulting
criminal investigation by destroying evidence. Kwon also disclosed to law
enforcement authorities the efforts by Cho and another Nova Datacom employee to
obstruct the criminal investigation, including Cho’s attempts while wearing a
recording device to prevent Kwon from making incriminating statements.

Kwon learned of a second, similar scheme
through another business contact: Nick Park, a former Nova Datacom employee who
was then the president of Unisource Enterprise Inc. Kwon learned through Park
that he had obtained a subcontract for his company by agreeing to pay bribes to
a person identified in court documents as “Public Official C.” This official,
based at the time in Seoul, South Korea, was an assistant project manager for
the U.S. Army who had responsibilities for a major contract.

In or about February 2009, Kwon
established Avenciatech for the purpose of obtaining government contracts. The
following month, Kwon traveled to South Korea to meet Public Official C. In
exchange for an undisclosed ownership interest in Avenciatech, Public Official
C agreed to use his official position to steer subcontracts from the Army to
Avenciatech. Plans later called for Public Official C to have a 40 percent
ownership interest in the company.

The court documents provide details
about two contracts. One, in September 2009, was in the amount of $366,844.
However, army change orders later increased the value of this subcontract to
$1,913,059. The second contract, obtained in February 2011, was in the amount
of $551,093. Change orders later increased its value to $1,413,513.

From February 2009 until October 2011,
Kwon made a series of bribe payments to Public Official C. They included cash
payments; payments for hotel stays for Public Official C and family members,
including a trip to the Atlantis resort in the Bahamas; payments to finance the
purchase of a 2010 Lexus automobile; and payments for other things of value.
Kwon also assisted Public Official C in financing the purchase of a home in
Fairfax Station, Virginia, where Public Official C resided following his reassignment
in 2010 to a position at Fort Belvoir.

Kwon also pled guilty to charges in a
separate scheme involving bank fraud. In addition to running Avenciatech, Kwon
was the operations manager for Onyx Financial Services, a mortgage broker based
in Annandale. He admitted involvement in at least six fraudulent real estate
sales and refinances in northern Virginia, with loan amounts of about $1.8
million.

Finally, Kwon pled guilty to the willful
failure to file a tax return. This charge involved his 2010 income tax return.

Cho pled guilty in September 2011 to one
count of conspiracy to commit bribery, money laundering, and wire fraud and to
defraud the United States and one count of bribery. Khan pled guilty in May
2012 to one count each of bribery and conspiracy to commit money laundering.
Park pled guilty in June 2012 to two counts of bribery.

The others who have pled guilty include
Michael A. Alexander, a former program manager with the Army Corps of
Engineers; Harold F. Babb, the former director of contracts at Eyak Technology
LLC (EyakTek), an Alaska Native-owned small business; Theodoros Hallas, who
also worked for Nova Datacom; Robert L. McKinney, the president of Alpha
Technology Group Inc.; James Edward Miller, the owner of Big Surf Construction
Management LLC; Larry G. Corbett, the owner of Core Technology LLC and
Enterprise Technical Solutions Inc.; Lee A. Khan, the son of Kerry Khan; and
Nazim Khan, the brother of Kerry Khan.

Alexander was sentenced earlier this
month to a six-year prison term and ordered to pay $1.25 million in restitution
and a $1.25 million forfeiture money judgment. The other defendants are
awaiting sentencing.

In announcing the plea, U.S. Attorney
Machen, Assistant Director in Charge McJunkin, Inspector General Gustafson,
Special Agent in Charge Craig, Special Agent in Charge Raven, and Director
Robey thanked those who investigated the case from the FBI’s Washington Field
Office; the Office of the Inspector General for the Small Business
Administration; the Department of Defense’s Defense Criminal Investigative
Service; the Defense Contract Audit Agency; the Washington Field Office of the
Internal Revenue Service-Criminal Investigation; and the Army Criminal
Investigation Command. They also expressed thanks to the U.S. Marshals Service
for its assistance on the forfeiture matter.

They also praised the efforts of those
who worked on the case from the U.S. Attorney’s Office, including Assistant
U.S. Attorneys Michael K. Atkinson and Bryan Seeley of the Fraud and Public
Corruption Section and Assistant U.S. Attorney Anthony Saler of the Asset
Forfeiture and Money Laundering Section. Finally, they expressed thanks for
assistance provided by former Special Assistant U.S. Attorney Christopher Dana;
Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Lenisse
Edloe, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, and
Nicole Wattelet; and Legal Assistants Krishawn Graham and Jessica McCormick.